Sales of existing homes fell in June for the third straight month, the National Association of Realtors said today. Sales in June were about 2 percent below where they were a year ago.
What are existing homes sales? Existing homes have already been lived in — think used cars. Around 90 percent of the houses sold in the U.S. are existing homes, so they’re a good barometer for the housing market.
What are new homes sales? New homes have never been lived in. They can be under construction, completed and empty or not yet started. The new house is considered sold after a sales contract is signed.
So why are existing home sales down? Housing economists say it’s not a problem with demand (lots of people want to buy a home). Rather, it’s a supply problem: There just aren’t enough existing homes on the market (i.e., homeowners are staying put). The homes that are for sale are relatively few and precious — that makes them more expensive and out of reach for many first-time homebuyers. New homes aren’t making up for the shortage. Fewer new homes are under construction, because it’s hard for builders to find workers and land in desirable areas. Construction materials are also more expensive.
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